These policies, enshrined in trade pacts, have little to do with classic notions of trade and everything to do with creating a borderless global economy where multinational corporations are accountable to no one in fulfilling their only goal of enriching shareholders (including first and foremost the top executives).

In a trade war between the U.S and China, nobody would win, but Donald Trump has threatened to start one. The Wall Street Journal’s Andrew Browne looks at the potential fallout for U.S. workers. Photo: CCTV

The first policy casualty in the wake of Trump’s electoral win last week was the Trans-Pacific Partnership, a 12-nation trade pact that President Barack Obama stubbornly clung to in the face of mounting opposition.

Now Obama himself has acknowledged that approval of the pact in the lame-duck congressional session currently under way is off the table, effectively killing an accord that Trump would never agree to.

There was nothing more anti-establishment than Trump’s broadside against trade agreements that export manufacturing jobs, shut down factories, devastate communities, and drive tens of thousands to drug abuse and suicide.

The U.S. trade deficit has widened since the early 1990s.

The mainstream media, when not dwelling on Trump’s personal shortcomings with prurient interest, took umbrage at this flagrant challenge to one of the pillars of neoliberal orthodoxy currently reigning in industrialized countries. And they are not letting up now that he has won the election.

“Trump’s antagonists are Wall Street institutions, multinational corporations, major business organizations, academic economists, editorial boards, business journalists, opinion writers, bloggers, and the generally knowledge-free mainstream media,”Kevin Kearns, president of the U.S. Business and Industry Council, wrote in a long op-ed last week. “All are opposed to Trump because they are wedded to a false, out-dated ‘free trade’ dogma, which has decimated the working and middle classes.”

MIT economist Simon Johnson warned darkly of a stock-market crash if Trump won the election, because investors would worry that his “anti-trade policies” would plunge the world into recession.

Steven Rattner, a former investment manager who has been barred from the securities industry by the SEC, still has a big platform because of the millions he raises for the Democratic Party. Rattner took to the pages of the New York Times after the election to alarm everyone that Trump’s policies would “do harm” to the global economy.

Investors, like the voters who propelled Trump to the White House, seem to think otherwise. The U.S. stock market has soared to new record highs in the wake of the election on the expectation that Trump’s plans to restore growth will actually work.

The other side of that coin is the crash in bond prices, as investors push up the yields on Treasuries in anticipation that the fiscal stimulus implicit in Trump’s pledge to increase spending and cut taxes will lead to more government borrowing and higher inflation.

But that is not a bad thing as economists and central bankers have been worrying about a deflationary spiral. Trump’s stimulus plan could reflate the economy and push inflation and interest rates to a healthier level.

The key point willfully ignored by reporters and pundits clinging to their religion of free trade is that a threat of tariffs is not a tariff. It is a negotiating position.

In deriding Trump for everything that comes out of his mouth, mainstream media have been quick to dismiss his repeated claims about his prowess in negotiating.

These same media acknowledged early in Obama’s tenure that this former community organizer could not negotiate his way out of a paper bag, starting talks where he wanted to end them and giving up more than he intended.

Now, however, anti-Trump voices want to take his threat of 45% tariffs against China as a fait accompli and paint a doomsday scenario of what that will mean for American consumers and the global economy.

The yuan fell to its lowest level against the dollar in nearly eight years Tuesday, continuing a recent drop that has accelerated since Donald Trump’s victory in the U.S. presidential election.

These critics claim Trump will start a trade war. Newsflash: We are already in a trade war started by the Chinese and others who have traditionally kept their currency devalued USDCNH, +0.0319% to flood our market with their goods while protecting their own. And we are losing.

This was precisely the point made last summer by Dan DiMicco, the former steel executive Trump has charged with managing trade issues during his transition.

“Hillary Clinton has claimed Trump’s trade policies will start a ‘Trade War,’ but what she fails to recognize is we are already in one,” he wrote in his blog. “Trump clearly sees it and he will work to put an end to China’s ‘Mercantilist Trade War’! A war it has been waging against us for nearly two decades!”

And hard-nosed bargaining will be the way Trump ends this war, DiMicco added. “He will do this by negotiating from a position of strength, not condescending weakness. China respects strength but takes full advantage of weakness. In the end it will be in China’s best interest to stop cheating on trade.”

China needs trade with the U.S. at least as much as we do. The idea, for instance, that China would retaliate against U.S. tariffs on some manufactured goods by blocking agricultural imports from the U.S. ignores the fact that China’s massive population has to eat.

China is the focus for unfair trade practices, but let’s not forget there are many others. Germany, for instance, manipulates its currency in a much more subtle fashion. By tying it to lower performing economies to keep the value of the euro EURUSD, -0.3388% low, Germany prospers while driving other euro countries to ruin.

Trade pacts with insufficient protections exacerbate this situation, as does a World Trade Organization with unenforceable restrictions.

Trump is exposing this charade for what it is. Solutions may not come easy, but you can’t solve the problem if you don’t first figure out what it is.

It is much easier for reporters, and the economists currently exerting influence on policy, to fall back on the bromides of the corporatist neoliberalism they have been indoctrinated in. One of the main reasons mainstream media missed the appeal of Trump’s candidacy is because they operate in an echo chamber that listens exclusively to this orthodoxy.

Finding the right policy mix to protect American jobs while encouraging a healthy level of fair trade will be a challenge. But we know trade pacts don’t get the job done and it’s time to try something else.